(a) Corporate Governance Direc

(a) Corporate Governance Directive is issued under the powersconferred by section 56 and 92(1) of the Banks and SpecialisedDeposit Taking Institution Act 2016 (Act 930). In the light of theabove statement, discuss the Corporate Governance Directives byBank of Ghana in
(i) Appointment of Directors
(ii) Manager of Bank
(iii) Key Management Personnel ​​​​
(b) In 2017 and 2018, a number of banks have been closed downor merged or by the Bank of Ghana (BoG). Depositor’s feltthreatened. What scheme is there to protect these depositors andwhat are the rationale behind such a scheme? Explain how it couldlead to financial stability.​​​​​​


Hi Friend,

Please refer to the solution below.


Directors’ Appointments and Managing Director/ChiefExecutive Officer Tenure

1. The procedure for appointment of directors to the Board shallbe formal and transparent and shall conform to the Directive issuedby the Bank of Ghana on fit and proper persons.

2. The tenure of the Managing Director/Chief Executive Officerof a Regulated Financial Institution shall be in accordance withthe terms of engagement with the Regulated Financial Institutionwhich shall be subject to a maximum of twelve (12) years. Suchtenure may be split into three (3) terms not exceeding four (4)years per term.

Appointment of Bank Manager

As per CORPORATE GOVERNANCE DIRECTIVE 2018, The manager and KMPwill followsame procedures.

“Key Management Personnel” means the chief executive officer ormanaging director, deputy chief executive officer, chief operatingofficer, chief finance officer, Board secretary, treasurer, chiefinternal auditor, the chief risk officer, the head of compliance,the anti-money laundering reporting officer, the head of internalcontrol functions, the chief legal officer, the manager of asignificant business unit of the a Regulated FinancialInstitution.

Appointment of Key Management Personnel

1. Every Regulated Financial Institution shall submit to theBank of Ghana before it appoints a Key Management Personnel, acomprehensive report on the due diligence conducted on proposednominees as Key Management Personnel. This submission shall be madein conjunction with the requirements under of Section 60 of Act930.

2. Where a director or Key Management Personnel associated withthe management of an institution whose licence has been revoked bythe 17 Bank of Ghana is to be appointed by a Regulated FinancialInstitution, the Bank of Ghana may exercise its discretion onwhether to approve such appointment after hearing representationsmade by the appointee.

2. Scheme introduced to protect depositors:

Ghana’s deposit protection scheme (like those of many otherjurisdictions) is designed to protect small depositors from lossesthat the depositors may suffer as a result of the depositor’sfinancial institution going under (i.e. in the event where thebank’s license is revoked or a liquidator is appointed over theassets of the bank). According to the Ghana Deposit Protection Act,2016 (Act 931), Depositors with banks cannot recover more thanGHS6,250 of whatever amount they had in their accounts. And in thecase of specialized deposit-taking institutions, a depositor cannotrecover more than GHS1,250. The coverage limits are expected to berevised every three years to take account of economic conditionsprevailing in the country and data concerning the development ofinsured deposits.

The operation of a functional deposit protection scheme wasexpected to operate in tandem with the Banks and SpecializedDeposit Taking Institutions Act, 2016 (Act 930). That explains whythese two Acts of Parliaments were passed around the same time. Inso many ways, Act 931 was intended to dovetail into Act 930. Thedeposit protection scheme was intended to be a safety net fordepositors who save their monies with the banks. Act 930 makes themembership of the Ghana deposit protection scheme a conditionprecedent to the issue of licences[1]. And in the same vein, when abank’s license is revoked, the deposit protection scheme is to benotified upon the commencement of liquidation and receivershipproceedings[2]. A bank or specialized deposit-taking institution isprohibited from declaring or paying dividends (whether interim orfinal) unless the bank can prove that it has satisfied everyobligation under the Deposit Protection Act, 2016 (Act 931) andpaid any outstanding premium owed the Ghana Deposit ProtectionCorporation[3]. Act 930 also requires the Bank of Ghana to updateand inform the Ghana Deposit Protection Scheme of anytime a bank ison the verge of failing.

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